CAG report picks holes in KMML operations

THE State-owned Kerala Minerals and Metals Ltd (KMML) has suffered production loss to the tune of Rs 358.59 crore due to lower efficiency of the titanium dioxide pigment plant, according to report of the Comptroller and Auditor General of India (CAG).

The report for the year ended March 31, 2004, which was tabled in the State Assembly, states that the company also incurred a loss of Rs 142.15 crore on account of short recovery of ilmenite, rutile and zircon from raw sand.

Besides, the premature failure of critical equipment and non-adherence to output norms of finished pigment resulted in a loss of Rs 40.80 crore to the company. Delay in installation of tunnel drier, interruption in supply of oxygen, procurement of packing system and failure to replace critical equipment in time also led to the loss of another Rs 42.01 crore, says the report.

In the case of Traco Cable Company, the report finds that the company incurred avoidable expenditure of Rs 1.40 crore towards overtime and production incentive for four years up to 2002-03. The company also gave penalty of Rs 4.35 crore to DoT/BSNL for delayed supplies.

These apart, idle wages paid by the company during the period of production hold-up from May 2002 to March 2004 amounted to Rs 4.07 crore.

According to the report, the implementation of Kuttiyadi Extension Scheme by the Kerala State Electricity Board (KSEB) without giving due regard to actual inflow of water rendered the investment of Rs 201.40 crore unfruitful.

Also, the failure of the board to maintain the letter of credit limit as prescribed by the Union Government for payment of dues to National Thermal Power Corporation resulted in avoidable loss of Rs 1.60 crore.

The inability of the board to obtain consumable spares and tools free of cost as provided in the contract led to avoidable expenditure of Rs 76.28 lakh, besides idle investment of Rs 1.57 crore in spares involving interest loss of Rs 40.90 lakh, the report says.

The report notes that a test check of the records of Government companies and statutory corporations disclosed deficiencies in management that had serious financial implications. In seven cases, unproductive expenditure/imprudent investment/blocking of funds and loss of interest amounted to Rs 214.96 crore.

In five cases, extra avoidable expenditure amounting to Rs 3.82 crore was detected. Again, loss of revenue of Rs 1.52 crore was found in two cases due to omission in applying the correct revised tariff.

(This article was published in the Business Line print edition dated July 8, 2005)

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